The choice of CBOE GLOBAL MARKETS INC (NYSEARCA:CBOE) comes from a methodical screening process made to find stocks that fit two different but connected investment approaches. The screen first uses the strict technical rules of Mark Minervini's Trend Template, a system centered on finding stocks in solid, confirmed uptrends. It then adds a fundamental filter for High Growth Momentum (HGM), looking for firms with quickening earnings and sales growth. This two-part method tries to locate securities that are both technically sound and fundamentally set for growth, a pairing frequently desired by investors focused on growth.
Meeting the Minervini Trend Template
Mark Minervini's method is based on the idea that the largest stock market successes are already in solid uptrends before their largest price gains. His Trend Template gives a precise list to check for these states, making sure a stock is in a verified "Stage 2" rise. CBOE seems to meet these important technical requirements.
- Price Above Key Moving Averages: The stock's last price of $289.90 trades well above its rising 50-day ($276.73), 150-day ($256.09), and 200-day ($250.44) simple moving averages. This order confirms the stock is in a continued uptrend across several timeframes.
- Moving Average Order: The 50-day SMA is above both the 150-day and 200-day SMAs, and the 150-day SMA is above the 200-day SMA. This "stacked" order is a clear sign of a good, quickening uptrend, showing steady buying interest.
- Nearness to Highs: At $289.90, CBOE is trading within 5.2% of its 52-week high of $305.68, easily within the Template's rule of being within 25% of the high. At the same time, the price is over 44% above its 52-week low, well past the 30% minimum. This shows solid momentum and an absence of overhead supply.
- Better Relative Strength: With a ChartMill Relative Strength (CRS) score of 85.77, CBOE is doing better than most of the market. Minervini states that real market leaders show high relative strength, as it points to institutional buying and sector strength.
For followers of the Minervini method, this technical picture is required. It methodically removes stocks in basing or falling stages, focusing money on issues where the main trend is clearly upward.
Qualifying for High Growth Momentum
While a solid chart is necessary, the Minervini approach also strongly considers fundamental improvement. The "High Growth Momentum" filter looks for companies where business results are getting notably better, often a reason for more price gains. CBOE's recent financial numbers display several signals of such improvement.
- Earnings Growth Quickening: The company's earnings per share growth is not only solid, it is quickening. Year-over-year EPS growth jumped to 45.7% in the latest quarter, a notable rise from the 20.3% and 14.4% growth seen in the two quarters before. This pattern of quickening quarterly growth is a main feature of new market leaders.
- Solid Yearly Growth: Over the last twelve months (TTM), EPS grew by 24.0%, adding to good double-digit growth in the years before. This steadiness is key for keeping investor trust.
- Growing Profitability: The company's profit margin in the last quarter was 25.9%, keeping a high level of profitability. More significantly, full-year margins have grown from 18.6% to 23.2% over the past year, showing better operational efficiency and pricing ability as the business grows.
- Positive Analyst Changes: Analysts have been increasing their estimates, a strong fundamental catalyst. The average EPS estimate for the next fiscal year has been raised by 7.4% over the last three months. Such changes often come before more institutional buying.
This fundamental picture gives the "reason" for the stock's solid technical performance. Quickening earnings and growing margins draw the institutional money that feeds continued uptrends, creating a positive cycle that the Minervini method aims to find early.
Technical Condition and Current Position
A look at the detailed ChartMill Technical Analysis report for CBOE gives a wider view. The report gives the stock a perfect Technical Rating of 10 out of 10, showing very good condition across both short and long-term timeframes. The long-term trend is rated as positive, while the short-term trend is neutral, hinting at a time of consolidation inside the larger rise.
The report states that CBOE is doing better than 91% of its peers in the Capital Markets industry and is trading in the higher part of its 52-week range, matching the wider market. However, the Setup Quality rating is now a 4, showing that while the stock is technically very good, its recent price action has been too unstable to offer a low-risk, standard consolidation breakout entry point at this precise time. The analysis proposes waiting for a tighter, more set price pattern to form before thinking about a new entry.
Finding Like Opportunities
CBOE shows the kind of security that passes a detailed screen joining momentum and growth. Investors wanting to use this strict combination of Minervini's technical template and high-growth fundamental filters to find other possible choices can view the screen here: High Growth Momentum + Trend Template Screen.
Disclaimer: This article is for informational and educational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell any security. The analysis is based on data provided and certain screening methodologies, past performance is not indicative of future results. Investors should conduct their own due diligence and consider their individual financial circumstances and risk tolerance before making any investment decisions. Please read our full disclaimer here.